(This story was originally published for NCC News at Syracuse University. View the original story.)
Young entrepreneurs receive small loans to finance dreams
Isaac Rothwell hopes to start his own audio production company, but for now works full time for a city non-profit. He builds his dream at night.
A passion for creating and producing music fuels 29-year-old Isaac Rothwell as he tries to start his dream company, an audio production service to help musicians, filmmakers, and advertisers produce high-quality work. However, finances have always been a problem for Rothwell, who is slowly building a full studio in the basement of his West Side neighborhood home.
"It's a constant battle for me," Rothwell said, "between what can I afford to get and what would I like to get."
Rothwell has had to move very slowly over the years, building up piece by piece while working a full time job at the
Center for Community Alternatives, where he helps persons with criminal records find jobs. Rothwell says giving back to the community is important for him.
And now, the community might just be able to give back. The
Near West Side Initiative, also known as the SALT district, hopes to begin a micro-loan program to give entrepreneurs like Rothwell the money they need to expand their local businesses. In addition, the group will support lendees on a continual basis providing training and guidance before and after the loan.
Rothwell says he only needs a few thousand dollars to expand his capabilities. He said he's had to turn down many jobs because he hasn't had the money for all the equipment he needs.
Micro-loan, aren't all loans the same?
The short answer is no.
Bob Herz, director of the
South Side Innovation Center (SSIC), says banks tend not to give loans to small businesses that aren't under 30,000 dollars. Well, not without high interest rates. Credit cards? Same problem he says.
Micro-loans, also known as micro-finance, is a way of giving entrepreneurs and established companies an extra shot of life when they're resources are spent.
"What we find is that so many entrepreneurs have put so much of their time and so much of their resources into their business idea that they don't have a lot left," said Herz.
Micro-loans were first used outside of the US in places like India where women were given 1 dollar a day to start businesses in their skill.
Micro-finance and micro-loans are different in the U.S. The dollar figure is higher, usually between 1,000 and 20,000 dollars (still under the normal banking level). But the concept of guiding the lendeed through, and remaining supportive of them through the life of the loan is the same.
Initial program's success leads to expansion
Herz's organization is the model for the SALT district program. His program, SSIC, has given out over 20 microloans since the program began, and only two have defaulted. Herz said his program works closely with lendees all the time, and keeps them on track.
"Our bank likes to say we have a lot of deliquencies," said Herz, "but no defaults."
The program works because Herz makes an agreement with participating banks to guarantee a percentage of a loan if it defaults. The guarantees are funded by grants given to the SSIC.
Herz said his program, like SALT, provides one on one support anytime. At a minimum, his clients recieve sixty hours of training in topics such as HR, administrative organization, training in office programs like Word or Excel, and finance training.
Before any loan is given, Herz works people through their whole idea until a firm business plan is created and approved.
"You can not get to a micro-credit loan unless you got a business plan, and unless we approve you," Herz said.
The cost of the program, 75 dollars once clients are ready to draft a business plan. However the program returns all but 25 dollars if the client finishes the process.
Back to the music...
Returning to Isaac Rothwell, who works nightly in his basement turning it into a studio, he hopes the success Herz created in the south will be duplicated on the West Side. He grew up on the west side in Syracuse, and feels he can help the city by establishing a business there.
"It's time for people that have seen this or are aware of this," said Rothwell, "we need to provide the same quality of life in this neighborhood as in any other part of Central New York."
Rothwell said he is committed to helping the neighborhood and, if his business grows, to even start programs where high school kids from the area can learn the job and a little money at the same time.
Of course, the first step is to finish the new studio and buy the equipment necessary to grow. Rothwell hopes his micro-loan will end his waiting, and get him moving to the next step.
